

Standing Committee B

[Mr. Nigel Beard in the Chair]

Enterprise Bill

Douglas Alexander: I beg to move,
That the Order of the Committee [16th April] relating to programming be amended as follows:— 
for paragraphs (4) and (5) there is substituted— 
`(4) the proceedings on Clauses 20 to 66, Schedule 5, Clauses 67 to 81, Schedule 6, Clause 82, Schedule 7, Clauses 83 to 86, Schedule 9, Clauses 87 to 160, Schedule 8, Clauses 161 to 174, Clause 199, Clause 175, Schedule 10, Clauses 176 and 177, Schedule 11, Clauses 178, Schedule12, Clause 12, Schedule 2, Clauses 13 and 14, Schedule 3, Clause 15, Clause 19, Schedule 4, Clauses 227 and 228, Schedule 14, Clauses 229 to 231, Schedule15 and Clauses 232 to 238 shall (so far as not previously concluded) be brought to a conclusion at 7p.m on Tuesday 7th May;'; 
 in paragraph (6), for `5 p.m. on Thursday 9th May', there is substituted `7 p.m. on Tuesday 14th May'; in paragraph (7), for `7 p.m. on Tuesday 14th May' there is substituted `5 p.m. on Thursday 16th May'. 
 We have agreed to extend the Committee's proceedings by providing an additional two sittings, which will allow for the consideration of the remaining mergers and market investigation clauses. The motion removes the knives that would have fallen today at 1 pm and 7 pm, so as to conclude that portion of the Bill by Tuesday.

Nigel Waterson: I welcome the Minister to the Committee. I am not sure that the Under-Secretary agreed that all our debates were focused and constructive, but we think that they were.
 I am grateful to the Government for reconvening the Programming Sub-Committee this morning. It was a helpful initiative, but they brought that situation on themselves. We have been saying from the outset that the Bill needed a longer Committee stage than it had been given, and even a further day's sittings do not do it justice. We tried to press our views on the Government on how much time we should spend on each part of the Bill, but the usual channels and the Government were not remotely interested, so we have got into this mess. 
 In part, the position is remediable by the motion: we will be able to do more justice to the clauses under 

debate. However, nothing can bring back the clauses on consumer protection, which were simply not debated because of the knife in the programme resolution, so considerable damage has already been done. Many consumers and consumer organisations will be puzzled and distressed that we were not able to debate those provisions and others in the detail that they would have liked. 
 We readily agreed to the proposal at the Programming Sub-Committee because it seemed the sensible thing to do at this moment of the Committee's history. However, we put down a marker on the subject of insolvency, which is in the final part of the Bill. No massively important party political issues relate to insolvency, but there is a mass of technical, legal detail on which we have received a large number of proposed amendments and a great deal of briefing from a range of organisations, which were apparently consulted before the Bill was published. I am not trying to put the fear of God into the Minister, I am just saying that we have a lot to get through. I put down the marker that problems may arise again when we reach the subject of insolvency. I hope that the Government will be ready to remedy them should they arise. Only on that basis are we happy to agree to the motion.

Ian Pearson: I am glad that the Opposition at least recognise that the Government have been flexible to a degree by altering the business to be considered today. I do not want to cover old ground, but it is a bit rich for Opposition Members to criticise the Committee for not considering all the consumer protection clauses. We had 16 hours 20 minutes of debate before the first knife fell on proceedings. Some 36 clauses were covered and 24 clauses were not covered, which, it is fair to say, was due to the Opposition not managing their time very well. Notwithstanding our feeling that they spent an awful lot of time on clause 20 and could have used their time better, we decided that we wanted to offer the extra sittings to allow more effective consideration of the Bill.
 We are being reasonable and are prepared to look again at the matter if we find that the insolvency provisions are going to take longer to consider than has been allocated. Four full sittings have been allocated to the insolvency provisions, which is reasonable. We think that the original Programming Sub-Committee resolution was also reasonable, but we are prepared to be flexible and look at things to ensure good and effective consideration of the Bill. 
 Question put and agreed to. 
 Clause 66 ordered to stand part of the Bill. 
 Schedule 5 agreed to. 
 Clause 67 ordered to stand part of the Bill.

Clause 68 - Initial enforcement orders: completed mergers

Nigel Waterson: I beg to move amendment No. 273, in page 49, line 41, after `created', insert—
`(aa) the provisions of section 20(1)(b) have been satisfied;'. 
 There is an echo of our previous debates on the dominance test, of which the Opposition are still in favour. We should like subsection (3) to be tied in with the amendments we tabled on the dominance test, which would have allowed the OFT to act if it had grounds to suspect that a dominant position would be created or enhanced and competition would be significantly reduced. The Government have set their face against the dominance test as a matter of principle—I will not pursue it in detail now as we debated it as a matter of principle—but we still think that there should be an additional requirement in the provision, and are open to argument from the Minister as to how our concerns, and those of the CBI, might be met in a different way. I hope that that helps to illustrate the concerns that lie behind what is, after all, a probing amendment.

Douglas Alexander: Perhaps I can help the hon. Gentleman by clarifying our response to both the CBI and the probing amendment. The amendment would prevent the OFT from introducing an initial order unless it has a reasonable suspicion that the creation of the relevant merger situation has resulted, or may be expected to result, in a substantial lessening of competition. In practice, however, if the OFT were to hear about a merger that clearly has no competition implications—for example, two businesses in very different markets—it would be highly unlikely to make an order preventing further integration of the merged entity. The OFT will act only if it is concerned about the merger's likely impact on competition. I am confident that the additional criterion required by the amendment will be applied automatically in practice.
 We have not formally introduced such a requirement in the Bill because, not least, we foresee difficulties in drafting it in a workable way. The problem is that it is difficult not to set the test too high and thereby render the clause unworkable in practice. To make a reference, the OFT must believe that a relevant merger has resulted or may result in a substantial lessening of competition in any market or 

 markets. Any test would have to be sufficiently lower than that belief in order to allow the OFT to act while it establishes whether there is a case for a full reference. I assure the Committee that we have considered that carefully and we are not convinced that we can create a workable formula.

Nigel Waterson: I am pleased to hear from the Minister that the matter has at least occurred to the Department and been considered. I do not want to detain the Committee unduly, so I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 68 ordered to stand part of the Bill. 
 Clause 69 ordered to stand part of the Bill.

Clause 70 - Effect of undertakings under section 69

Douglas Alexander: I beg to move amendment No. 181, in page 51, line 12, after `notified', insert
`(whether in writing or otherwise)'.

Douglas Alexander: Through these amendments we seek to clarify that where the Bill refers to information that should be notified, such notification need not be in writing.
 Amendments Nos. 181 and 188 amend the clause and schedule 6, which is the equivalent provision covering the exceptional public interest enforcement regime. Material facts about the reference must be notified to the OFT prior to acceptance of undertakings in lieu. The amendments confirm that such notification need not be in writing. 
 Amendment No. 193 amends schedule 7, which sets out the remedies that may be included in a final order.

Nigel Waterson: I want to intervene before the Minister moves on and we lose this crucial moment. I accept that these are minor amendments, but I want to comment on notification in writing. I am puzzled about the circumstances the Minister has in mind in which such an important matter would not be communicated in writing. Surely it is in everyone's interest to have a record, and matters are put in writing to provide that record. These are key issues for all involved. Does the Minister envisage a chance conversation or a telephone call about them? I am trying to tease out of him whether that is what he has in mind.

Douglas Alexander: The example that comes to mind is when parties cannot fulfil requirements to notify information on prices, for example, without having to publish everything in writing in great detail. I hope that there is unanimity in the Committee on wanting to minimise the burdens on businesses, and that amendment No. 181 is seen for what it is: an attempt to support the broad thrust of the Bill, which is to

 assist businesses and, when it is unnecessary, not to require vast wads of paperwork. 
 Given the concern about and interest in amendment No. 181, I should comment on amendment No. 193. It amends schedule 7, which sets out the remedies that may be included in a final order. Under the schedule, an order may require the notification of prices. The amendment ensures that notification has the same meaning in the schedule as elsewhere in the Bill: it need not be in writing. 
 These are primarily technical amendments, but the changes are important to protect businesses in their dealings with the authorities and to give them the comfort with which we want to provide them. 
 Amendment agreed to. 
 Clause 70, as amended, ordered to stand part of the Bill.

Clause 71 - Order-making power where undertakings under section 69 not fulfilled etc.

Nigel Waterson: I beg to move amendment No. 276, in page 51, line 37, after `7', insert
`and essential to avoid the creation or strengthening of a dominant position'. 
 Having said all that, the effect of the provision is that one could have divestment ordered—it is a pretty extreme measure—in respect of an acquisition that had never been subject to a full review by the Competition Commission. That seems somewhat harsh to us. A better approach would be to limit the power under subsection (4). The amendment details how we chose to put that when we tabled a whole raft of amendments. There may be other ways of putting it that would improve the amendment; I am not necessarily wedded to the wording. However, we hope that the Government have considered the issue, or will consider it further. It seems at the very least odd, and potentially unfair, that something as serious as divestment could in theory—one would hope that it would not arise in practice—be visited on a company without the matter being reviewed thoroughly and fully.

Tony McWalter: This feels a bit like old ground. Why did the hon.
 Gentleman not consider an amendment related to the substantial lessening of competition test, which I thought Conservative Members had accepted?

Nigel Waterson: The hon. Gentleman is making a bid to be a substitute Chairman of the Committee. I am happy to take interventions on the meat of the Bill, but I am not prepared to take interventions from Government Back Benchers on how we choose to conduct matters. The amendment was tabled to this clause and has been selected, so I cannot help the hon. Gentleman any further. I made the point on the previous amendment that we do not want again to get into a debate about the dominant position—that has not gone away; we still think that it is a good idea—but if the Government think that they have a monopoly on good ideas, that is a matter for them, as long as they have a majority.

Jonathan Djanogly: Presumably, the dominance test was put in as a test, but the point would be no less well made if another type of test were used, particularly the lessening of competition.

Nigel Waterson: My hon. Friend has put it better than I did. That was exactly the point that I was fumbling towards making. Let me assure the hon. Member for Hemel Hempstead (Mr. McWalter) that the dominance issue is there for historic reasons—perhaps he is here for historic reasons—but has nothing to do with the central issue raised by the amendment. The penalties that can be imposed on someone are pretty harsh even when there has not been a full review of the situation. That is the point, and I am interested to hear what the Minister has to say.

Douglas Alexander: Given that this morning is the first time that I have addressed the Committee, I shall leave aside the contentious subject of history or old ground and start with the amendment's intention.
 As I understand it, the amendment would limit the OFT's power to make an order in cases where it has become apparent that the parties concerned are not complying with an undertaking in lieu or have provided materially false or misleading information to the OFT before the undertaking was accepted. From the terms of the amendment and the remarks of the hon. Member for Eastbourne (Mr. Waterson), I understand that the particular purpose is to prevent the OFT replacing a behavioural undertaking in lieu with a divestment order. 
 Any order made under the clause may be different from the undertakings that it replaces. That is the same degree of flexibility that is available to the Secretary of State under the Fair Trading Act 1973. The hon. Gentleman's comments reflected the fact that it is necessary to allow the OFT to impose a different remedy if that is warranted, for example, by a different analysis that emerges after false or misleading information comes to light. However, on the substantive point of seriousness or harshness, as the hon. Gentleman described it, I remind the Committee that the OFT will be required to act in a 
 reasonable manner in replacing an undertaking with an order. Therefore, any new remedy will have to be justified in the circumstances of the case. If the OFT did not act reasonably, the parties would, of course, have recourse to an appeal to the competition appeal tribunal. 
 I further remind hon. Members that enforcement actions are very rarely necessary in respect of undertakings given by parties at any stage.

Andrew Lansley: I should like to clarify what reasonableness will mean in that context. The OFT, when making such an order, should have the flexibility to try to establish through it what was originally intended by way of undertakings or would otherwise be justified in trying to avoid a substantial lessening of competition. Will the Minister confirm, however, that there should be no element of punitive action in any order made?

Douglas Alexander: My understanding is that the provision is specifically to address cases in which misleading or false information has been provided. Therefore, the remedy appropriate in the circumstances will reflect the particular causes of the initial orders that have been established.
 I reinforce the point that instances in which the OFT has had to operate over such matters have proved very rare. If the parties do not follow the guidance provided by the OFT in the first action, the OFT's likely response will be to encourage the companies to comply with the terms of the original undertakings. That cannot be punitive in the terms in which the hon. Gentleman asked his question, but aims to address the problem that the undertakings were originally directed towards addressing. 
 I hope that that has offered sufficient comfort to the Committee and that, in the light of the undertakings that I have given, the hon. Member for Eastbourne will be able to withdraw the amendment.

Nigel Waterson: I am grateful to the Minister. As he has rightly pointed out, we are talking, on any view, about rare instances, and there is a back-up of reasonableness and the prospect of an appeal to the tribunal, which is fine. The issue was worth raising, but I shall not press the amendment to a vote. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 71 ordered to stand part of the Bill. 
 Clause 72 ordered to stand part of the Bill.

Clause 73 - Restrictions on certain dealings: completed mergers

Question proposed,That the clause stand part of the Bill.

Nigel Waterson: This clause calls out for a modest stand part debate. We tabled an amendment, which is probably surplus to requirements, that it be deleted altogether. As it stands, it provides for certain automatic restrictions on dealings related to a completed merger that has been referred for investigation. In effect, companies are prevented under the provision from taking any further steps without the consent of the Competition Commission.
 That has caused concern, not least for the CBI, which thinks, I think rightly, that it would be preferable to see the authorities rely on clauses 76 and 77, which already give them the power to offer undertakings or make orders, but without this automatic prohibition on a wide range of activities. 
 Under the Fair Trading Act 1973, there are narrower provisions that call for restrictions on share dealings. One can certainly see the wisdom of that, without too much thought. Restrictions on share dealings are the most likely restrictions that we would be talking about in such circumstances. That is already in the legislation. It is generally accepted that that is needed in the armoury. It would be preserved under clause 74 on that basis. 
 It is difficult to see why further restrictions should automatically kick in when there has merely been a reference for investigation. That puts an awfully large lock on many activities in which companies, even in that situation, may want to be engaged. There is a worry, which is why we have tabled a probing amendment.

Jonathan Djanogly: I fully support what my hon. Friend has said. The concept of automatic prohibition seems strange in some ways, particularly because it is automatic in so far as there may be circumstances when it is appropriate for the merger to go ahead, such as not upsetting companies that may be in a difficult position, or to save jobs when they are at risk unless particular action is taken immediately.
 Undertakings may be required under other provisions and companies will carefully assess what the position is. They may come to the overall opinion that they have a certain percentage chance of divestiture coming out of the investigation. However, balancing that with the need to keep their businesses intact and not lose jobs, they may decide to go ahead with the merger. Therefore, the absolute prohibition that the clause would provide seems strange and I would be interested to hear the Minister's opinion as to why that is justified in all situations.

Mark Field: I also have grave philosophical concerns about clause 73. It is wrong for the commission to have an overriding power. The Minister will no doubt tease out one or two examples of why it is important to have that power in place.
 My hon. Friend the Member for Huntingdon (Mr. Djanogly) has already touched on sensitive 
 mergers that have taken place when there is a jobs issue vis-a¨-vis international trade. In that case, there may be some mileage in putting certain restrictions in place. Surely the onus should be on the commission to justify the idea that certain restrictions should be put in place in what I suspect will be a relatively small number of circumstances. 
 The commission should be able to make its case in relation to those particular mergers. It should not be the other way around. It would be a difficult job for a company to ensure that it should not be subject to any great restrictions over time. Given that the raison d'être of the Bill is to favour enterprise and competition, it seems somewhat odd that the commission has that strong power.

Jonathan Djanogly: Is my hon. Friend not making the case that we are moving from a situation in which companies can take their own decisions, appreciating the possible consequences, to one in which they are shackled?

Mark Field: My hon. Friend put that far more eloquently than I could have done. I was nanoseconds from the end of my contribution anyway. I look forward to hearing what the Minister has to say.

Andrew Lansley: I do not want to deal with the philosophy behind the clause, but I have one question on subsection (7). I wonder whether the Minister could offer some guidance. I understand that the Bill is constructed around UK rather than European Commission merger control. If a merger is essentially trans-national, it will be dealt with on an EC rather than a UK basis. Is there a loophole? I am looking for reassurance from the Minister that there is not. The merger situation could be UK-based, so far as the enterprises are concerned, the control could be a UK control and the orders of that kind could refer to UK nationals, and so forth, but if the company were listed on the New York stock exchange, the connected persons trading in those shares could, in effect, undertake transactions that might be prejudicial to the merger reference and this order would not necessarily bite on them.

Douglas Alexander: Clause 73 introduces an automatic restriction on the parties to a completed merger, as we have discussed, once it has been referred. That will prevent them from any further integration without the consent of the Competition Commission. Further integration could prejudice the Competition Commission's ability to take remedial action following its inquiry. I am sure that that is widely accepted on both sides of the Committee. The hon. Member for Eastbourne mentioned share dealing. If a merged entity makes staff redundant, sells off assets, integrates computer systems or takes any other similar action, it could be very difficult for the commission to effect a divestment of the merger businesses thereafter.
 In the past, the authorities have sought to prevent such further integration by seeking voluntary undertakings from the parties or by imposing an interim order. It is clearer, simpler and more efficient to create a new prohibition that applies to all 
 completed mergers that are referred. In answer to the question about how that advances our objective of enterprise, the degree of certainty provided by the clause will avoid a huge amount of work having to be undertaken by the authorities and the company, in terms of discussions and preparation of interim orders. People will be able to be certain, at the outset of the merger, that such a step will be taken.

Mark Field: I accept the ingenious argument on certainty, but surely the provision is not intended to apply to many cases. Or, is it the Minister's contention that this will be an automatic power, which will come into play in every single merger situation? What proportion of cases that come before the commission does the Minister envisage being subject to the provisions in the clause?

Douglas Alexander: I do not think that I can answer the question as directly as the hon. Gentleman wishes, with an exact proportion. What I can say is that we are trying to make the provisions that already exist more effective. Helpfully, however, I have just been passed a note with an exact proportion on it: it is only completed mergers, which are roughly 30 per cent. I anticipate that that figure will be ongoing. The clause does not intend to widen that scope significantly, but to make real and effective the available powers, consistent with an obligation to which we hold ourselves—to give a degree of certainty to the businesses involved.
 I have some observations on the argument of the hon. Member for Huntingdon about the automatic nature of the prohibition. The United Kingdom is unusual in allowing mergers to complete prior to scrutiny. We strongly argue that this clause is a necessary balance to the fact that mergers can take place with a degree of power that would otherwise prevent the Competition Commission from doing its job thereafter, as a result of further activity being taken forward.

Jonathan Djanogly: I thank the Minister for giving way on that important point. As he says, in most other countries, permission has to be gained before the merger takes place. That is not the case in this country and mergers can take place, so the companies will already have incurred costs. They will have spent a substantial amount of money not only on the merger, but on integrating the systems. If a merger takes place, the companies have to prepare for that situation.
 Is it not therefore the case that companies should either have to get consent beforehand or be able to get on with it and take the consequences if the OFT decides that they must divest, or accept some other type of order? Are we moving towards a halfway house where, on the one hand, companies will be able 
 to complete but, on the other, they will not be able to make the necessary preparations for that completion?

Douglas Alexander: I prefer to characterise the position that we are adopting as a balanced approach rather than a halfway house. I have a couple of observations, following on from the hon. Gentleman's remarks. First, there will be an initial finding by the OFT about mergers in those circumstances likely to lead to a substantial lessening of competition. There remains scope for companies to agree a tailored undertaking with the OFT, if they do not like the terms of the statutory restrictions. In that sense, there is an adequate and appropriate degree of flexibility but, on the other, the clause is necessary to allow the Competition Commission to do its job.
 How companies manage the merger process is a matter for them. We aim to provide an appropriate degree of certainty. There remain provisions whereby companies can notify authorities in advance and build into their merger-planning the assumptions necessary for the appropriate involvement of authorities. On that basis, the clause is entirely consistent with the Bill's broad thrust.

Tony McWalter: Bearing in mind concerns that have been expressed in Committee, can my hon. Friend the Minister confirm that, among other things, the clause will be particularly important where people want to create quick-sale mergers and engage in making wholesale redundancies, factory closures and so on? The clause could protect workers in that situation.

Douglas Alexander: I am grateful for my hon. Friend's observations. As I said at the beginning, there are circumstances in which, without the Bill's provisions, mergers could immediately be followed by a mass lay-off of staff. Given the significant development in the integration of computer systems, the ability of many modern businesses to decouple or divest after mergers could be commensurately undermined without the provisions. We are therefore clear that the clause is important to balance companies' needs to be able to plan merger activities with the power that the Competition Commission must be given to do its job.

Nigel Waterson: Will the Minister help me? My understanding is that the provisions are not designed to deal with the situations outlined by the hon. Member for Hemel Hempstead, which are matters for employment legislation. If the provisions could be so used, the Committee would be interested to hear about it.

Douglas Alexander: I fear that we are confusing cause and effect. The terms on which the Competition Commission acts are consistent with the rigorous competition test outlined in the White Paper and the Bill. The reality of overlooking the need to stop divestment at a particular point, or at least to allow the commission to investigate, could well fit the circumstances described by my hon. Friend the
Member for Hemel Hempstead, not just in terms of employment, but in strategic decisions taken on shares, investment, employees or computer systems in the company. I hope that I have answered hon. Members' questions. 
 Question put and agreed to. 
 Clause 73 ordered to stand part of the Bill. 
 Clause 74 ordered to stand part of the Bill.

Clause 75 - Section 73 and 74: further interpretation provisions

Douglas Alexander: I beg to move amendment No. 182, in page 55, line 1, leave out `(8)' and insert `(1)'.

Nigel Beard: With this it will be convenient to take Government amendments Nos. 183 to 186.

Douglas Alexander: We hold our hands up. The amendment simply corrects an error in the reference to a particular subsection, so it is purely technical. All the references in subsection (2) to "(8)(a)", "(8)(b) and so on, should have stated "(1)(a)", "(1)(b)" and so on. In light of that, I ask hon. Members to support the amendment.
 Amendment agreed to. 
 Amendments made: No. 183, in page 55, line 3, leave out `(8)' and insert `(1)'. 
 No. 184, in page 55, line 5, leave out `(8)' and insert `(1)'. 
 No. 185, in page 55, line 6, leave out `(8)' and insert `(1)'. 
 No. 186, in page 55, line 8, leave out `(8)' and insert `(1)'.—[Mr. Alexander.] 
 Clause 75, as amended, ordered to stand part of the Bill.

Clause 76 - Interim undertakings

Douglas Alexander: I beg to move amendment No. 266, in page 56, line 20, after `section' insert—
`; and references to the acceptance or giving of undertakings under this section shall be construed accordingly'.

Douglas Alexander: The amendments seek to ensure that undertakings on orders accepted by the OFT that are then adopted by the Competition Commission or the Secretary of State are treated like other undertakings or orders. The technical amendments are needed because at various points in part 3 we refer to undertakings that have been accepted under clause 76 and orders that have been made under clause 77. However, undertakings on orders can also be adopted under those clauses if they have been previously accepted or agreed by the OFT. We therefore need to be clear that such orders should
 be treated in the same way as other orders, to which they are in all respects equivalent. 
 Amendment agreed to. 
 Clause 76, as amended, ordered to stand part of the Bill.

Clause 77 - Interim orders

Amendment made: No. 267, in page 57, line 16, after `section' insert— 
`; and references to the making of orders under this section shall be construed accordingly'.—[Mr. Alexander.]

Clause 78 - Final undertakings

Nigel Waterson: I beg to move amendment No. 67, in page 57, line 30, after `undertakings', insert—
`, but no such undertaking may be accepted from persons other than one who is a party or is a member of the same group of companies as a party to the merger or anticipated merger in question'. 
`, but no such order may be made against any person other than one who is party or is a member of the same group of companies as a party to the merger or anticipated merger in question'. 
 The new powers are drafted in wide terms and will give the Competition Commission power to accept undertakings from persons it considers appropriate. We do not want to see, and business certainly does not want to see, what is supposed to be a merger investigation effectively turning into an investigation into a whole industry. The Bill provides for looking into that sort of thing, but this is not that provision. In that context, the Competition Commission and the OFT should not be empowered to make orders against parties who are not party to a merger or an anticipated merger. We are deeply sceptical about why the power should have been drafted in such wide terms, and no doubt the Minister will take us through 
 the Department's thinking. We need a pretty strong justification from him as to why people wholly unconnected with the merger should be drawn into the process.

Vincent Cable: I want to say a few words in support of the amendment and the legal community's helpful approach to clarifying existing vague and woolly language. It would be helpful if the Minister could give examples of the way in which people who are considered appropriate under the legislation could be involved in an undertaking although not party to a merger. Consumer groups, affected workers and so on might have an interest in mergers but would not be involved in giving undertakings. The only people I can think of who might be involved are competitors, as the hon. Member for Eastbourne said, and other people within the industry. I shall quote a couple of topical examples that might suggest how the clause could come into play—the Minister has confirmed that that is the intention.
 In the banking sector, there is a high level of concentration among the leading clearers and there have long been arguments about whether mergers should be allowed among those in the remaining group. Let us suppose that an ambitious, expanding clearer such as the Royal Bank of Scotland, which owns NatWest, moved in on Lloyds TSB and the competition authorities considered that inappropriate in competition terms. Is it the intention of the clause that the Competition Commission could say in its determination not only that the merger was unacceptable, but that written undertakings would be required from Barclays and HSBC that they were not engaged in comparable merger activities even when they had not contemplated such activities? That is the sort of hypothetical situation in which the clause might come into play. 
 Another topical example about which I have written to the Minister concerns competition in the accounting profession, which is a small group and will become even smaller with the disappearance of Andersen into Deloittes. The competition authorities might discourage that merger because it would result in excessive concentration but then demand of PricewaterhouseCoopers that it divests some of its business to improve competition in the industry. The clause is so openly phrased that it could lead the competition authorities into such powers, which would be new. I am not completely familiar with the history of competition policy, but I would have thought that the clause could open new vistas and uncertainty. Perhaps the Minister will clarify with examples exactly what the provision is intended to cover and not to cover.

Tony McWalter: In his reply, will my hon. Friend the Minister take into account the back reference to clause 33(3)(b) which states:
"recommend the taking of action by others for the purpose of remedying, mitigating or preventing the substantial lessening of competition"?
That might refer to the fact that some companies have a sweetheart company and could facilitate a merger that is not in the public interest by getting it to divest itself of certain interests, which makes it impossible for the merger not to go ahead. Is that, rather than the observations made by the Opposition, what my hon. Friend has in mind?

Douglas Alexander: The amendments seek to prevent third parties from being the subject of undertakings or orders following merger inquiries. I start with a candid confession: I share the concern that third parties should not be drawn unnecessarily into the remedy-setting process following a merger. It is the decision of the parties to merge, if that could lead to a substantial lessening of competition, that the authorities will address. The merger parties must be the focus of any remedy, whether by seeking an undertaking or, in exceptional circumstances, by imposing an order.
 I am not convinced of the case for the amendment, however. The approach taken on both undertakings and orders mirrors the provisions of the Fair Trading Act 1973, which has been in place for almost 30 years. The Act's order-making power in section 73 does not mention the parties that may be subject to an order. 
 I emphasise that although clauses 78 and 80 may not, on the face of it, appear to limit who can be subject to an undertaking or an order, the commission's freedom for manoeuvre is actually limited by clause 39. Clause 39(2) requires that where action is taken 
 "to remedy, mitigate or prevent the substantial lessening of competition... or... any adverse effects which have resulted", 
 that action must be reasonable and practical. 
 The key word for our purposes in this debate is reasonable. Any decision to impose an order or request undertakings must be reasonable. It will almost always be unreasonable to attempt to impose an order on a party that is not a party to the merger to address a problem that has been caused entirely by the actions of the parties that are. If the commission tried to do that, the parties affected would undoubtedly have the decision reviewed by the Competition Appeal Tribunal, which would almost certainly caution it. 
 I am wary of being drawn into real-life examples, but I hope that I have given some comfort to the hon. Member for Twickenham (Dr. Cable), on his questions about the banking sector and insurance.

Nigel Waterson: I do not want to disappoint the Minister, but it is difficult to grapple with the provision in its present form without some real-life examples. The hon. Member for Twickenham, with a
more vivid imagination than I, has come up with some thoughts, but I, for the life of me, cannot imagine what the provision is getting at. Why are those words in there, unless just through sloppy draftsmanship—as we know, that never happens.

Douglas Alexander: I certainly concur with the hon. Gentleman on that point, despite the amendments that I have just tabled.
 I hesitate to use real-world examples, given the individual commercial players, but I shall try to give a hypothetical example to give the hon. Gentleman the comfort that he seeks. When I looked at the material over the weekend, I asked officials for exactly such an example. The transfer of an exclusive distribution arrangement with a third party might form part of a merger situation. The Competition Commission might reasonably conclude that it must terminate part or all of that arrangement to remedy the substantial lessening of competition. The third party might consider it in its own interests to give undertakings regarding partial or complete termination of that agreement rather than see the merger blocked completely. Alternatively, were it reasonable to do so, and the Competition Commission decided to order a complete termination of the arrangement, an order might have to be made against both parties. 
 That possibility, that a third party be subject to undertakings or an order in certain circumstances, suggests that we should leave the clause as it stands. In conclusion, although I share the concern of hon. Members on both sides to protect third parties and limit the scope of the investigation of the merger in hand, I do not believe that the amendments are necessary. The legislation already provides effective protection for those third parties that we have discussed this morning and does so in a more flexible way. I therefore ask the hon. Member for Eastbourne to withdraw the amendment. If he does not, I shall ask the Committee to oppose it.

Nigel Waterson: Before the Minister gets heavy about it, of course I shall withdraw the amendment. I must say that I am still not wholly convinced. We might wish to return to the matter on Report. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 78 ordered to stand part of the Bill.

Clause 79 - Order-making power where final undertakings nor fulfilled

Douglas Alexander: I beg to move amendment No. 187, in page 58, line 7, after "Commission" insert "or the OFT".

Nigel Beard: With this it will be convenient to take Government amendments Nos. 189, 190 and 194.

Douglas Alexander: These amendments seek to clarify that where the OFT is given misleading information in negotiations about undertakings, that can be grounds for replacing undertakings with an order. An undertaking may be replaced with an order if it emerges that a party gave misleading information to the Competition Commission or the Secretary of State prior to agreeing that undertaking. Given that the OFT will also be involved in the negotiation of final undertakings and undertakings in lieu, it could be that a party receives the misleading information. We must make the changes to clarify that, where the OFT receives misleading information, that too is valid grounds for replacing an undertaking with an order. I ask the Committee to support the amendments.
 Amendment agreed to. 
 Clause 79, as amended, ordered to stand part of the Bill.

Clause 80 - Final orders

Nigel Waterson: I beg to move amendment No. 261, in page 58, line 29, leave out subsection (2) and insert—
`(2) The Commission may make such order as it considers to be reasonable and practicable 
 (i) to remedy, mitigate or prevent the substantial lessening of competition concerned; and 
 (ii) to remedy, mitigate or prevent any adverse effects which have resulted from, or may be expected to result from, the substantial lessening of competition.'. 
 The objective as set out in clause 78, for example, is to obtain voluntary undertakings where possible. That is clearly the policy: to deal with matters in a rather more consensual way. It is not limited by schedule 7 and is therefore entirely flexible. That is in the interest of both sides of the equation. A company may decline to give an undertaking when it knows that no equivalent power is available under schedule 7. 
 It is fair to say that there have been occasions when the OFT found a remedy could not be imposed. The Competition Commission talked about potential remedies at the end of its investigation and framed its report accordingly. The amendment reflects the

Douglas Alexander: The amendment would have two effects. First, it would clarify that orders may be made only with a view to remedy, mitigate or prevent the substantial lessening of competition or any adverse effects resulting. Such orders should be reasonable or practical. Secondly, it would remove the reference to orders containing only remedies set out in schedule 7 for such supplementary consequential or incidental provision as is necessary.
 With regard to the first effect—I will come on to the points that the hon. Gentleman made thereafter—I should clarify that the current wording in subsection (1) requires the Commission to act "in accordance with section 39" when making an order. Clause 39(2) specifies exactly what is set out in the amendment, namely that the Commission shall take such action under clause 80 as it considers reasonable and practicable to remedy, mitigate or prevent the substantial lessening of competition concerned or any adverse effects arising. We would therefore argue that there is no need for the same words to be written out in full in clause 80. 
 With regard to the second effect, the deletion of the reference to schedule 7, I wonder whether that was the hon. Gentleman's intention. I sense from his remarks that it was. That would allow the Competition Commission complete discretion, subject to their being reasonable and practical, in the remedies that they included in any final order. That would provide considerably more flexibility than the Secretary of State has at present, when final orders can include only remedies listed in schedule 8 of the Fair Trading Act. 
 We see the new schedule 7, which largely replicates the former schedule, as an important check on the power of the Competition Commission and want to retain subsection (2) of the clause as it stands. In light of the assurances that I have provided to the Committee, I hope that the hon. Gentleman will withdraw the amendment.

Nigel Waterson: I am grateful to the Minister for that explanation. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 80 ordered to stand part of the Bill.

Clause 81 - Enforcement regime for public interest and special public interest cases

Question proposed, That the clause stand part of the Bill.

Andrew Lansley: I do not want to detain the Committee for long. I made the following point yesterday in relation to a number of preceding clauses. At this stage, we are re-entering the structure of the Bill as it relates to special public interest cases. For that purpose, I am interested in the extent of the public interest. We have previously discovered, or at least I have discovered although some members of the Committee may have known this already, that the Secretary of State will be able to intervene in public interest cases to require a reference to be made, and will be able to make a reference even if the OFT has advised against it or has seen no adverse public interest.
 The Secretary of State will, in effect, be able to disregard a report from the Competition Commission and proceed with accepting undertakings or making orders. A whole enforcement regime will flow from that, to a point at which it would be very kind of them to contemplate the thought that the OFT might advise them. There will be no further contemplation that the OFT's advice should be heeded by them in any way. As far as I can see, they will be entirely free to proceed as they think fit. 
 We have a complete structure from an initial intervention by way of specifying additional public interests that have to be considered all the way through to enforcement action, and at no point will the Secretary of State be formally constrained by the advice of the OFT or the decisions of the Competition Commission. I make that point because I want to put on record that the more I spend time on that matter, the more necessary it becomes for the Government to consider a different regime for any public interest case that does not relate specifically to national security. I shall leave special public interest cases out of that because we discussed them yesterday.

Douglas Alexander: I shall endeavour not to cover ground that, as the hon. Gentleman said, the Committee has already covered. Instead, I want to focus my remarks specifically on clause 81.
 Clause 81 will bring into effect a separate but similar enforcement regime for those cases in which the Secretary of State decides to intervene. I should like to highlight the two main differences between the enforcement regime for the Secretary of State and that for normal merger cases. First, the Secretary of State's interim undertaking and order-making powers will cover the period before and after a reference. They will come into effect once the Secretary of State has introduced the intervention notice, which may be before or after the merger has been referred. Those are referred to as pre-emptive undertakings, in order to distinguish them from the OFT's initial orders and the Competition Commission's interim orders and undertakings. 
 Secondly, the Secretary of State will make the orders by statutory instrument. The OFT and the Competition Commission will make orders on their 
 own authority because we believe that that is appropriate for independent competition authorities. Unlike the Competition Commission, the Secretary of State will continue to evaluate a merger on the basis of the public interest test. Because Parliament is, of course, the guardian of public interest, it seems appropriate that it will remain involved in approving the Secretary of State's order on those matters. In future, all such orders will be made under the negative resolution procedure. Previously, any order involving divestment would have required an affirmative resolution. Divestment is now treated like any other remedy in the main merger regime; it is no longer treated separately. 
 To address a couple of points made by the hon. Member for South Cambridgeshire (Mr. Lansley), I confirm that it is our intention to ensure that the Secretary of State takes the final decision on cases that raise matters of public interest. However, he or she will be constrained by having to accept competition authorities' views on competition. Of course, the Secretary of State, rather than the OFT, will have a determinative role.

Andrew Lansley: I do not want to delay the Committee, but I want to make it clear that I understand the Minister's point about the way in which the Secretary of State will be constrained on competition matters by the advice of the OFT or the decisions of the Competition Commission. We are, however, dealing with a public interest enforcement regime. Unless the Minister tells me that I am wrong, I shall assume that the Secretary of State will not be constrained on public interest matters by such advice or decisions.
 As far as I can see—we may discuss this in detail although perhaps we do not need to—as a result of bringing schedule 6 into effect, clause 81 will not even constrain Secretaries of State in making orders to remedy any adverse public interest effects that arise as a result of the Competition Commission's investigation. They seem to be free to accept undertakings or make orders as they choose. I hope that that is not the case, but I should like to know whether there is some such provision.

Douglas Alexander: I am wary of being drawn on to ground that has been covered at some length. I hoped that Members would agree unanimously that it is appropriate that public interest decisions rest specifically with Secretaries of State, not least given the degree to which they are accountable to Parliament, which is best placed to determine and advance public interest. The importance of Parliament is a message that has been heard loud and clear in recent years, and the clause reflects that.
 Question put and agreed to. 
 Clause 81 ordered to stand part of the Bill. 
Schedule 6 Enforcement regime for public interest and special public interest cases

Schedule 6 - Enforcement regime for public interest and special public interest cases

Amendments made: No. 268, in page 196, line 33, after `paragraph' insert— 
`; and references to the acceptance or giving of undertakings under this paragraph shall be construed accordingly'. 
No. 269, in page 197, line 43, after `paragraph' insert 
`; and references to the making of orders under this paragraph shall be construed accordingly'. 
No. 188, in page 199, line 14, after `notified' insert 
`(whether in writing or otherwise)'. 
No. 189, in page 199, line 27, after `him' insert `or the OFT'. 
 No. 190, in page 205, line 15, after `him' insert `or the OFT'.—[Mr. Alexander.] 
 Schedule 6, as amended, agreed to. 
 Clause 82 ordered to stand part of the Bill.Schedule 7Provision that may be contained in certain enforcement orders

Schedule 7 - Provision that may be contained in certain enforcement orders

Douglas Alexander: I beg to move amendment No. 191, in page 209, line 7, after `proceedings;' insert—
`(ja) the approval by the relevant authority or another person of anything required by virtue of the order to be done or of any person to whom anything is to be transferred, or in whom anything is to be vested, by virtue of the order;'.

Nigel Beard: With this it will be convenient to take Government amendment No. 192.

Douglas Alexander: Amendment No. 191 introduces an express provision to allow the competition authorities to approve the buyer of a divested asset, or to approve other conduct in relation to divestment. We initially thought that paragraph 10 would allow the authorities to do that. That provision gives the authorities approval of conduct in matters relating to anything that may be prohibited by an order. However, we subsequently concluded, for technical reasons, that approving a buyer in relation to a divestment would not be covered by that paragraph's scope.
 It is important that the authorities can approve the buyer of a divested business because it means that the divestment has the desired effect of reversing the substantial lessening of competition. That allows the authorities to avoid a situation where they require the divestment of a business only for it to be sold to a major player in the same market. That would only continue the competition problem. 
 Amendment No. 192 is a consequential change required to ensure that the phrasing in paragraph 14(k) is consistent with the proposed paragraph 14(ja). I ask hon. Members to support this technical amendment.

Jonathan Djanogly: Paragraph 10 and the new power, which will give the OFT the right to approve the buyer of a divested business, requires consideration. I am not sure under which circumstances the power would be justified, and to allow the OFT to decide to whom the business should be sold seems a significant increase in the state's power. I can understand the need to divest in certain circumstances, but why should the state be able to tell the company to whom it should divest? That is otiose.
 If the divesting would be in breach of the competition regulations, the sale could be investigated and an inquiry could be mounted. However, we are considering the simple situation of the state being able to tell a business that it can or cannot sell interests to someone else. I would appreciate it if the Minister explained the circumstances in which that might be allowed and in which the provisions could be used in respect of a further sale.

Douglas Alexander: The recent Interbrew case suggests that we currently enjoy the power in schedule 8, although that is not explicit in the schedule. If it would be helpful, I am happy to ensure that a letter is sent to the hon. Gentleman explaining that case law.
 My more general point is consistent with that I have just made about the case surfacing and the fact that the power exists. I hesitate to concur with the hon. Gentleman's view that the amendment reflects a substantive increase in the power of the state. It is merely a technical amendment to ensure that existing powers can be used.

Jonathan Djanogly: The problem is that we are moving towards the state deciding to whom businesses should be sold. Does the Minister believe that that is sensible? I understand the need for the negative, but the provision is almost positive in terms of the OFT being brought into the process of selling. That is not a healthy advance.

Douglas Alexander: I sought to clarify the fact that the amendment does not reflect a significant and substantive increase in the powers of the state. It goes to the fundamental basis of our thinking in the Bill, which involves interaction between state and market. We are clearly of the view, as expressed in the White Paper, that a degree of transparency and rigour is welcome, but equally that the authorities should be empowered with the ability to take necessary action, consistent with the provisions that we are discussing, to ensure genuinely competitive markets. If we share the ambition of an enterprising economy, with productivity as well as profits and a genuinely competitive environment in the United Kingdom, there is a serious and important discussion to be had about the best role for individual competition authorities. We are clear that we have struck the right balance in the White Paper and the Bill. It will provide the necessary leadership in competition and enterprise policy to achieve the sort of economy that we are aiming for.
 Amendment agreed to. 
 Amendments made:No. 192 in page 209, line 9, after `by' insert `virtue of'. 
 No. 193, in page 210, line 18, at end insert— 
`22A References in this Schedule to the notification of prices or other information are not limited to the notification in writing of prices or other information.'—[Mr. Alexander.] 
Question proposed,That this schedule, as amended, be the Seventh schedule to the Bill.

Jonathan Djanogly: I would like to hear the Minister's opinion on two further points. First, paragraph 11 could result in goods or services having to be supplied to a specific standard, but there is no reference to the level of that standard. Does the Minister foresee the standard in the order being higher than that currently provided? The question concerns certainty for businesses and it is important to discuss that.
 My second point relates to paragraph 20, which refers to publication of information supplied to the Competition Commission. I have spoken in different contexts on that point before. Why does that paragraph not deal just with companies that are subject to the merger itself? If information is published about a third-party company, in the interests of maintenance of its confidentiality and of respect for confidential information, that company should be requested to give its consent before the information is published.

Tony McWalter: I would like the Minister to consider one element of schedule 7 that slightly worries me. Paragraph 2(2) states that an order may not be made in so far as the agreement relates to the
"terms and conditions of employment of any workers". 
I think that I can understand the reasoning behind that. Presumably, one would not want the enforcement authorities to tell a group of workers who have negotiated a certain holiday entitlement that, as part of the conditions imposed, their holidays would be scrapped. I can see that the paragraph might intend a certain element of protection for workers. 
 What worries me slightly is that, particularly when an enterprise is going through an uncertain period and possibly a merger as well, workers can be given conditions such as zero-hour contracts and various other shenanigans can go on. There are problems about whether it is reasonable for a company to merge with the possible intention of giving those highly deleterious working conditions to an entire group of workers rather than to one part of it. I wonder whether the Minister might consider that there could be occasions when the paragraph might work against the interests of a work force, rather than protect their rights, as was its intention.

Douglas Alexander: First, I will place in context my remarks in response to the comments of the hon. Member for Huntingdon. Schedule 7 sets out the list of matters specified in the Competition Commission's
report that can be included in final orders for the purpose of remedying the adverse effects following a merger or market investigation. That list is based on schedule 8 of the Fair Trading Act 1973. It has been updated to reflect modern drafting conventions. Certain new remedies have been added. Those are remedies that expedience has already shown it would be useful to be able to call upon. I will address one or two of those specific remedies. 
 The first point raised by the hon. Member for Huntingdon related to paragraph 11. That allows parties to be required to supply goods and services to a particular standard or in any particular manner. Bus companies would be one example. They can be required to maintain a certain frequency of service. That must be a remedy to a competition problem. I emphasise that that is the thinking behind paragraph 11.

Jonathan Djanogly: My point was that there is nothing that stipulates the level of the standard. Will the Minister comment on whether it is likely in any circumstances that the level in the order will be higher than the current one?

Douglas Alexander: I hope that my earlier remarks concerning how we are trying to update the FTA give the hon. Gentleman the comfort that he is looking for. We are seeking to reflect in modern drafting some of the experience and insights that we have gained from the implementation of the Fair Trading Act over almost 30 years. In that sense, the ambition of the drafting was to ensure replication while anticipating in practical terms the problems that have been encountered in implementation of the Fair Trading Act.
 On the hon. Gentleman's more substantive point about paragraph 20, the provision on disclosure of information in clause 235 will apply to the publishing of information. I understand that he is content to address those substantive questions when we get to clause 235. I hope that that is an adequate answer at this stage of the debate. 
 I have not had the opportunity to consider in detail the points made by my hon. Friend the Member for Hemel Hempstead on paragraph 2. I should be happy to write to him on them.

Jonathan Djanogly: I should appreciate it if the Minister addressed the matter of the publishing of information, as we may or may not get to clause 235 during this stage of the debate. The matter is specifically and directly addressed in paragraph 11.

Douglas Alexander: I shall try to offer what assurance I can to the hon. Gentleman. Under paragraph 20, the authorities will have regard to the need to exclude information that would be contrary to the public interest or that might significantly harm legitimate business interests or individuals' interests. They must also have regard to the need to disclose information that will ensure effective enforcements. That is the basis on which the paragraph was drafted. I hope that that answers his question.
 Schedule 7, as amended, agreed to. 
 Clauses 83 to 86 ordered to stand part of the Bill. 
 Schedule 9 agreed to. 
 Clauses 87 to 89 ordered to stand part of the Bill.

Clause 90 - Rights to enforce undertakings and orders

Jonathan Djanogly: I beg to move amendment No. 278, in page 63, line 34, leave out subsections (3) and (4).

Nigel Beard: With this it will be convenient to take the following amendments: No. 279, in page 64, line 13, leave our subsection (9).
 No. 280, in clause 91, page 64, line 18, leave out subsection (1). 
 No. 281, in clause 91, page 64, line 21, leave out subsection (2). 
 No. 282, in clause 91, page 64, line 23, leave out subsection (3). 
 No. 283, in clause 91, page 64, line 28, leave out "also". 
 No. 284, in clause 91, page 64, line 31, leave out "also". 
 No. 285, in clause 91, page 64, line 34, leave out subsection (6).

Jonathan Djanogly: I should like the Minister to clarify a particular issue when he responds to the amendments. If a divesture order is implemented and a company goes into a sale process and appoints agents but no buyer appears, in what circumstances does the Minister envisage a claim under subsections (3) and (4), as they are currently constituted, and bearing in mind subsection (5)? That will be a relevant consideration and concern for businesses.
 There are further concerns behind the wish to delete subsections (3) and (4). We are discussing any one person being able to mount an action. Again, that will lead to uncertainty for companies. Whether an undertaking has been breached may itself be subjective and open to interpretation. That could be used by a single person as a means of causing vexatious actions against the company; or a few customers out of several thousand might decide to use those provisions in that way.

Tony McWalter: Will the hon. Gentleman confirm that he basically agrees that the whole principle of giving undertakings is a good idea and a progressive way forward, although it could go wrong?

Jonathan Djanogly: The principle of undertakings is one that I accept and it is unnecessary to remind the hon. Gentleman that the concept is not new. It is currently used—often constructively. It can be less formalistic than going through all the other procedures. I am talking about the ability of unconnected individuals to bring an action against a company for a breach of
 that undertaking. It is a question of who should have a claim. If subsections (3) and (4) were used in the wrong way, they could in effect be a way of blackmailing a company. On the basis that it is likely that the Minister is going to oppose the amendments, does he agree that it would be correct to insert some form of de minimis mechanism to ensure that a small number of people cannot blackmail a company?

Douglas Alexander: The amendments seek only to allow the Competition Commission, the OFT and the Secretary of State to bring civil proceedings to enforce undertakings, orders and statutory restrictions on further integration and share acquisition. I understand the hon. Gentleman's concern that it might be too easy for people to bring actions in the courts, which would lead to a rise in unnecessary litigation and subsequent costs to business, but I am not convinced that the provisions would have that effect.
 The FTA refers to any persons bringing civil proceedings in respect of any failure or apprehended failure of the person responsible to fulfil the undertaking in section 93(2) of that Act, and applies similarly to any persons bringing civil proceedings in respect of any contravention or apprehended contravention under that section. The breadth of the provisions has been limited by the judgment on the merger involving Mid Kent Holdings in 1997. In the light of that judgment, we decided in drafting clauses 90 and 91 not to provide for any person to bring an action. 
 We will allow only those persons who sustain loss or damage as a result of any breach of an undertaking, order or statutory restriction to bring an action. That means that people directly affected by the failure of a party to comply with its obligations will be able to bring an action. That will provide an appropriate balance and address some of the concerns about the need to ensure that there is an appropriate standard before an action is brought. 
 Although the statutory restrictions were not enforced in that way under the FTA, the restriction on integration is new and there are no grounds for treating it differently from undertakings or orders. Notwithstanding my previous profession as a Scottish lawyer, like other Government Members and Opposition Members, I am keen to avoid an overly litigious system, but we must strike the right balance between protecting the parties from undue interference and cost, and allowing those parties with a genuine grievance access to redress. The formulation in clauses 90 and 91 achieves that balance. 
 I must admit to the Committee that I did not follow the logic of the hon. Gentleman's first point, but if I failed exactly to comprehend it, I would be happy to write to him.

Jonathan Djanogly: At the start of the sitting, I pointed out that subsection (5) would stop a vexatious
litigation claim in circumstances in which a company did its best to divest. It would be helpful if the Minister dealt with that because it would give some comfort to business, which will be concerned by those provisions. 
 I should like the Minister to comment on the slightly broader proposal that I made in my opening remarks. If he does not accept our amendments, does he not believe that there should be some limit on a minimum claim level—perhaps not as specifically put in the amendments—or a de minimis mechanism that would come into play to ensure that claims that were taken up were serious, which would reduce the threat to business of claims being made for the sake of it?

Douglas Alexander: I hope that I can offer the hon. Gentleman reassurance. The terms of the Fair Trading Act 1973 are the basis on which we move forward. I sought to ventilate in my earlier remarks that we have tried to limit the scope of those capable of bringing such litigation. We have been alive to concerns about an over-litigious system, which is why the scope has been narrowed. We have more of a meeting of minds over the outcome than the hon. Gentleman suggests, but I shall be happy to write to him on the issue of vexatious litigants and how the clauses address that.

Jonathan Djanogly: I thank the Minister for his response, and I hope that businesses take comfort from the Government's attitude to unnecessary litigation. I beg to ask leave to with draw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 90 ordered to stand part of the Bill. 
 Clauses 91 and 92 ordered to stand part of the Bill.

Clause 93 - Period for considering merger notices

Nigel Waterson: I beg to move amendment No. 286, in page 66, line 20, after `undertakings', insert—
`or that he agrees to give undertakings in terms which he specifies in his notice'.

Nigel Beard: Order. Is it the hon. Gentleman's wish that amendments Nos. 286 and 287 be taken together?

Nigel Waterson: No, I beg your pardon, Mr. Beard. I was getting ahead of myself. Thank you for getting
 me back on the straight and narrow. I shall deal with amendment No. 286. 
 The clause gives the OFT the power to extend the normal period of a merger notice where undertakings are being sought. In effect, the extension could continue indefinitely, but the party concerned has a power to give a notice of 10 days for the OFT finally to reach its decision. Subsection (8)(b) permits that, but only if parties are not prepared to give the undertaking requested. In practice, however, the OFT attempts to impose undertakings that are excessively harsh from the point of view of the parties involved. 
 It would be a shame if the parties had to opt either to refuse to give an undertaking, which would result in an almost certain ban after the 10-day period, or to continue with a protracted negotiation. It would be better if they could give 10 days' notice to specify the undertakings that they wanted to give, so that the OFT could make a ruling that took those suggestions into account. The amendment is minor, but not simply technical, and it imports greater flexibility into the clause. It takes some pressure off parties in such a situation.

Douglas Alexander: Amendment No. 286 would have the effect of causing the merger notice period to expire in advance of the parties giving binding undertakings. The amendment envisages a new procedure in which the parties would give the OFT a notice that set out the terms of undertakings that they were prepared to give; the OFT would have only 10 days in which to accept the proposals or make a reference. As I hope that I can explain, we are not convinced that that would work effectively in practice. Under the current system, the OFT will already have received an indication that the parties are, in principle, willing to offer an undertaking before the OFT in turn recommends such a course of action to the Secretary of State. There is then a process of pubic consultation and detailed discussion with the parties.
 The current system, which we propose to retain, allows a reference to be made if negotiations fail to reach a satisfactory and timely conclusion. That provides the parties to a merger with an incentive to reach such an early agreement with the OFT, which is in the interests of achieving certainty for all the affected parties. 
 Amendment No. 286 would undermine a system that we believe works effectively. Parties could give an agreement in principle to give undertakings but subsequently refuse to sign a particular text offered to them. Furthermore, the 10 days before the expiry of the extension period would, we believe, be insufficient for the OFT to consult all the interested parties in all circumstances and determine whether the terms proposed were sufficiently robust and a reference were not required. It would not be in the parties' interests for the OFT to be subjected to such a narrow time constraint. Overall, it seems much more appropriate to retain the benefits enjoyed under the 
 current system. I ask the hon. Member for Eastbourne to withdraw the amendment.

Nigel Waterson: I am not wholly convinced, but I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Nigel Waterson: I beg to move amendment No. 287, in page 66, line 27, leave out subsections (11) and (12).
 This is such an exciting amendment that I was falling over myself to propose it a moment ago. Its effect is fairly simple. It would allow the OFT to extend the merger notice period whenever it attempted to refer a case to the European Commission under article 22(3) of the EC merger regulations. The OFT has made a couple of such referrals in recent months, but on the basis that it accepts the need for the agreement of the notifying parties, who then need to withdraw the merger notice formally. The Confederation of British Industry takes the view, with which we concur, that that existing situation is preferable to what is proposed in the clause.

Douglas Alexander: Amendment No. 287 would, in essence, undermine the OFT's ability to use the process under article 22 of the European Commission merger regulations. The amendment would prevent the extension of the time limit in a merger notice case to allow the EC to consider and proceed with a request under that article 22 process.
 The provision in these subsections is necessary for the OFT to make effective use of that provision of EC law when it considers that, even though a transaction falls below the Community thresholds stated in the European merger regulations, it is more appropriate for the European Commission to consider it—because it would create or strengthen a dominant position, as a result of which effective competition would be significantly impeded in the UK or other member states. 
 Article 22 requests are not frequent, but there are circumstances in which that process potentially offers the most effective means of examining a case, for example, where a merger appears to raise competition concerns in several member states. In the absence of such a provision, the OFT would be faced with the choice of inviting the parties to withdraw the merger notice, or making a reference to the Competition Commission for fail-safe reasons. Although parties have so far been willing to withdraw a notice, under the new regime they could refuse to do so, requiring the OFT to make such a decision. The amendment would undermine the OFT's ability to use a provision of EC law in appropriate cases. 
 In the absence of that provision, parties could use the merger notice to avoid the possibility of EC consideration of a case pursuant to an article 22 request. Subsections (11) and (12) are therefore sensible provisions, which avoid the possibility of 
 nugatory references. I ask the hon. Gentleman to consider withdrawing the amendment.

Nigel Waterson: I am pleased to hear that the Minister has given the matter thought and that there is a certain logic to that thought, although we do not necessarily accept it. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 93 ordered to stand part of the Bill. 
 Clauses 94 to 96 ordered to stand part of the Bill.

Clause 97 - Merger notices: regulations

Question proposed, That the clause stand part of the Bill.

Nigel Waterson: This is another clause under which significant regulations will be made covering clauses 92 to 96. On more than one occasion I have asked the Minister's colleague, the Under-Secretary, whether we are likely to have sight of the draft regulations before the Bill leaves the House.

Douglas Alexander: Given the newness of my position in the Committee, I would be treading on my ministerial colleagues' toes if I did not take the opportunity to speak to them in advance of answering that question. However, I hope that during the course of the day we can provide some clarity on the point raised. My intention is certainly to provide the information requested in advance of commencement, but if anything further can be added following my conversations with ministerial colleagues, I shall endeavour to ensure that the hon. Gentleman is made aware of that during the day.
 Question put and agreed to. 
 Clause 97 ordered to stand part of the Bill.

Clause 98 - Power to modify sections 93 to 97

Nigel Waterson: This is a short clause, but it contains some significant powers for the Secretary of State. In three lines, the clause makes it clear that the Secretary of State can modify by order any of the provisions relating to merger notices and that seems a rather wide power. In theory, Secretaries of State can amend anything if they can find the parliamentary time and muster the votes. In the previous few clauses, what does the Minister believe might need to be changed in a hurry? Is it really necessary for the Secretary of State to take those major powers to herself and subsequent Secretaries of State? That is a current trend, which I cannot, as an individual, do anything to stop. It seems that when in doubt, the temptation is to give the Secretary of State endless powers to modify and change by order or otherwise. When the occasion demands, we should make the argument for not having such power in legislation.

Vincent Cable: I want to make a brief point in support of that contribution, particularly following the Minister's reply to our brief discussion on clause 97 when he courteously but not very informatively said that he would have to consult other Ministers on what the orders would consist of. The clause gives the Secretary of State power to change the rules under which notices will be issued. Following the Minister's strong reaffirmation this morning of his belief in parliamentary sovereignty, would not the affirmative resolution procedure be more appropriate than an arbitrary power to issue orders? The point has occurred not just to hon. Members in the Committee, but to those in industry and legal groups who are concerned that the clause represents a considerable accumulation of ministerial power and that greater parliamentary scrutiny should be afforded.

Douglas Alexander: I feel, with respect, that we are making a mountain out of a molehill.
 On the first point, I did not undertake to go away and find out what the provisions were; I undertook to establish the basis on which information would be made available to the Committee. I am grateful to the hon. Member for Twickenham for giving me the opportunity to clarify his thinking on that. 
 On the more substantive point, if there is a trend, as the hon. Member for Eastbourne suggested, it predates my arrival in the House. The provision identically replicates the terms of the Fair Trading Act. The idea that the Secretary of State is grabbing powers fails to recognise the reality. The provision simply replicates something that has been in place for nigh on 30 years. 
 The provision is prudent and allows Parliament to approve adjustments to the merger notice regime—one example might be timings. It is a sensible means by which we can provide future-proof assurance to the Bill. If reasonable changes that would be subject to parliamentary scrutiny were not anticipated, we would be obliged to return to the House and introduce further legislation when a minor reaffirmation of the position in the Fair Trading Act can ensure that that is unnecessary.

Ken Purchase: As a fully paid-up member of the awkward squad, I have to ask the Minister a question in this context: the political tide goes out and it comes in. I look to the future, when he will still be here long after I have left. Although I accept that the clause may not be the most serious matter that we ever deal with, if there is a trend, it is incumbent on me to secure, on the record, complete assurances from my hon. Friend that the nature of the provision is one that should not cause us difficulty in the future.

Douglas Alexander: I hope that I can give assurances to my hon. Friend. Why look in the crystal ball when we can read the history books? The clause replicates the FTA directly. To that extent, comfort can be
 provided on the basis of how Secretaries of State in turn have applied the FTA in the years since it came into effect. On that basis there is appropriate and legitimate concern about ensuring parliamentary scrutiny, and the avoidance of a situation whereby there could be wholesale changes to the terms on which the Bill is being discussed. I am certainly not convinced that the clause raised that spectre. I think that it is merely a sensible means of ensuring that the legislation is future-proof and entirely consistent with some of the sensible provisions that exist under the FTA. 
 Question put and agreed to. 
 Clause 98 ordered to stand part of the Bill. 
 Clause 99 ordered to stand part of the Bill.

Clause 100 - Certain duties of relevant authorities to consult

Vincent Cable: I beg to move amendment No. 200, in page 70, line 20, leave out `so far as practicable'.

Nigel Beard: With this it will be convenient to take amendment No. 170, in page 70, line 23, leave out subsection (4).

Vincent Cable: The amendments address a clause that places an obligation on the OFT, the Competition Commission or the Secretary of State in public interest cases to consult and give reasons for any adverse decision. The origins of the clause as I understand it, and I am not a lawyer, arose from a rather famous recent case in which the Competition Commission was effectively overruled on a judicial review in the case of Interbrew, a major brewery. That decision was interpreted as a major blow to the credibility and authority of the Competition Commission. It was one of its worst maulings in the court. The clause is intended to prevent that from happening again by requiring the competition authorities to consult and give reasons for their decisions.
 The language in which the clause is couched is grudging and foot-dragging. Whether it will ultimately satisfy the courts I do not know, but it hardly echoes the spirit of the court ruling. It states that it will provide reasons for decisions only "so far as practicable". That seems to be weak, and is a concern not just of the business groups that are following the legislation, but of the legal groups also. The purpose of the amendments is to have that qualification written out. The courts have spoken clearly on the matter. There were very good reasons for the court ruling. 
 It is important to set out grounds for refusal not simply to provide academic curiosity for people in the UK, but because a great deal of practice in the field is established by precedent. It is very important that those involved in merger decisions understand the precedents and the reasons that have been given by the competition authorities. One should not allow such weasel words to prevent the competition 
 authorities from giving good reason, especially when the courts have spoken so strongly on the subject. I would urge the Minister to delete those words, and to observe the full spirit of the court ruling.

Douglas Alexander: Obviously, amendments Nos 200 and 170 deal with consultation of parties. I fear, however, that the hon. Gentleman is labouring under a misapprehension in terms of our motivation. It is a truism that hard cases cause bad law. Rather than seeking to address any particular judgment that has been reached in court, it is the principle of increasing transparency that underpins clause 100, and runs consistently throughout the Bill.
 Clause 100 aims to put the principle that relevant parties should have the opportunity to respond on proposed decisions that would adversely affect their interests on a statutory footing. Where possible, authorities should consult with parties by providing reasons for a proposed decision. The presumption is that the parties will be consulted on the reasons for proposed decisions. It is, however, important to recognise that there will be conflicting priorities in some cases. It may therefore not be possible to provide reasons for all proposed decisions, particularly those involving short deadlines or sensitive information. 
 We are motivated by the desire to achieve not only transparency, but a business-friendly approach, and we have to strike a balance between the two. Companies will, of course, welcome being consulted on proposed decisions, but those self-same companies would object if their commercially sensitive information were not safeguarded. Amendments Nos. 200 and 170 would prevent the authorities from acting sensibly on a case-by-case basis.

Vincent Cable: The amendment was, of course, designed to tease out what lay behind the Government's thinking. Clause 100 seems to be an example of them taking with one hand and giving with the other. In trying to meet the entirely necessary requirement for transparency and explaining the basis for decisions, they have provided an open-ended clause that will ensure that those requirements may never be honoured in practice. I accept the Minister's comment, however, and beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 100 ordered to stand part of the Bill. 
 Clauses 101 and 102 ordered to stand part of the Bill.

Clause 103 - Further publicity requirements

Mark Field: I beg to move amendment No. 288, in page 74, line 7, at end insert—
`(4A) In performing any function pursuant to subsections (1), (2) or (3) to publish the result of any action taken by that person, the person shall not disclose any information which might significantly harm the legitimate business interests of another.'. 
Clause 103 and the clauses that surround it obviously contain some important safeguards on publicity requirements. Clause 103 contains a list of the matters that need to be published by the Competition Commission, the OFT or the Secretary of State in making a merger reference. We have obviously been in touch with the Confederation of British Industry, which suggested such an amendment. Under clause 103(4), in respect of substantive publications, the authority in question needs to publish its reasons for the action or decision concerned. As a result, on occasion confidential information may be put into play. 
 We can all appreciate that it is an integral part of the entire process that on occasion there will be confidential information that must remain in confidence under all circumstances. As a result, the amendment simply ties in with clause 231, which effectively states that there should be a specific obligation to ensure that confidential information is protected. We are therefore using wording that is akin to that which appears later in the Bill. We felt that we should replicate that wording by using the phrase 
"significantly harm the legitimate business interests".

Douglas Alexander: I fear that I may disappoint the hon. Gentleman, but I shall try to clarify our thinking.
 The amendment would alter the test that authorities will consider when publishing information. The Bill includes a provision to ensure that confidential information is adequately protected, which has already been discussed in Committee. The amendment would replace the provision in clause 235 with the more restrictive test, as has been outlined in Committee. It would undermine the ability of the OFT, the Competition Commission and the Secretary of State to take sensible decisions on the publication of merger information. 
 We have proposed a test for the disclosure of information that will apply to all merger information. Clause 235 sets out a test that ensures that authorities have regard to the need to publish information to fulfil statutory functions, and to the need to exclude information that might cause significant harm. That is an appropriate test and consistent with the thinking behind the Bill. I want to avoid an alternative, higher test that would be set by the amendment.

Mark Field: I am not entirely satisfied because the nature of the confidential information requires a higher test than the Government have in mind. However, we want to discuss other clauses, so I shall not continue. As my hon. Friend the Member for Huntingdon said, we will not reach clause 235, so it is worth highlighting it at this juncture even though
 the amendment may not be pressed. We may have to return to this sensitive issue on Report. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Mr. Alexander:I beg to move amendment No. 270, in page 74, leave out lines 13 to 16.

Nigel Beard: With this it will be convenient to take Government amendment No. 272.

Douglas Alexander: The amendments ensure that the duty to give reasons applies to enforcement action taken under the merger and markets regime. We have provided for authorities to give reasons for decisions to ensure that there is greater transparency throughout the regime.
 Amendment agreed to. 
 Clause 103, as amended, ordered to stand part of the Bill.

Clause 104 - Defamation

Question proposed, That the clause stand part of the Bill.

Nigel Waterson: This is a short clause, but it raises an important principle that I should like to explore. I have not tabled an amendment because my thinking was not sufficiently developed on the issue at the time. My question relates to the distinction between absolute and qualified privilege. It may take me a little time to explain.
 Can the Minister explain the thinking behind the clause? I assume that we need the clause because, unlike hearings before the commission and certainly before the Competition Appeal Tribunal, we must specify that advice, guidance, notices, directions, decisions and reports should all attract absolute privilege. I assume that because it is part of general law that all court hearings and proceedings are subject to absolute privilege, so hearings that are related to the Bill will be as well. However, that is not necessarily the case, so we must specify that the matters set out in the clause attract absolute privilege. Otherwise, that would not be built into the Bill. 
 The question of privilege is important, but I do not want to go up the highways and byways of the matter. There are interesting issues that relate to parliamentary privilege, but I shall not deal with them here. I am sure that you would not allow me to, Mr. Beard, even if I wanted to. 
 Let me repeat the point: judicial and parliamentary matters, for example, are subject to absolute privilege on the basis of law that is long settled—I think by the Parliamentary Papers Act 1840, as well as by case law. There is no way in which, under any circumstances, actions for slander or libel can ever be taken against judges, council witnesses, parties and 
 so on. I am assuming that that position applies to actual hearings before the commission or the Competition Appeal Tribunal. In the same way, all accurate reports of everything that we discuss here are subject to the same absolute privilege. 
 My concern relates to the constant thread that has run through our debates, and no doubt will continue to do so, about the vital importance of having clear rules on the use of confidential information about companies and the individuals who work for them. Much highly sensitive commercial information moves through the processes that the Bill sets up, and quite rightly. That is the nature of the beast. The deepest secrets of companies involved in highly competitive, cut-throat competition in a particular area are likely to be involved. 
 I tentatively ask whether it is worth considering making that subject to absolute privilege because absolute privilege is, as the name suggests, absolute. I can say absolutely anything that I want in the course of a speech to this Committee, within the bounds of your patience, Mr. Beard, about any member of the Committee or, more importantly, anyone in the outside world. No matter how scurrilous, untrue and unfair my remarks, I could get away with them. Qualified privilege is a different animal altogether. I do not want to take too long with this, but we must set it in context. As I understand it, broadly put, with qualified privilege, the occasion itself does not necessarily grant the privilege in the same way that happens with absolute privilege in our debates. 
 Qualified privilege can be overturned if the plaintiff in an action proves actual malice on the part of the defendant. It says in a textbook that there are three elements to the defence of qualified privilege: 
"(1) the occasion must be fit, (2) the matter must have reference to the occasion, and (3) it must be published from right and honest motives." 
 I think that we have already covered unfortunate publicity. I forget under which clause, but several hon. Members, in particular my hon. Friends the Members for Cities of London and Westminster (Mr. Field) and for Huntingdon, have touched on it. Unfortunate publicity often seems to attach to decisions to make references or to have dawn raids. Many of the details find their way into the media, in that mysterious way to which we have all become accustomed. 
 Let me say straightaway that, when it comes to qualified privilege, there is a form of public interest defence. A leading House of Lords case, Reynolds v.Times Newspapers, covers that. I need not detain the Committee with the details. If I may draw my remarks to some sort of conclusion, I am trying to suggest that if one were to stipulate qualified privilege 
 for these matters and for the proceedings themselves, it would help to concentrate the minds of all involved on ensuring that things are not said or written down that are not absolutely true and germane to the issue. 
 Giving people absolute privilege is quite a big step to take. I am not necessarily talking about irresponsibility or even malice, which is the way to remove oneself from the protection of qualified privilege. I am talking about people being more negligent than they should be about letting things slip in a particular investigation and in the various written documents of the sort referred to in the clause. I am not entirely convinced that this is something that we need to do. That is one of the reasons why I have not tabled an amendment. However, the Committee needs to hear the Minister's thinking behind the clause. First, why is it framed in the way that it is? I think that I know the answer to that. Secondly, are we perhaps being too generous to all those involved by giving them absolute privilege behind the curtain of which things can be said that could well damage people's reputations and commercially sensitive situations?

Douglas Alexander: I will try to address both those substantive points in the order in which the hon. Gentleman raised them. First, on the thinking behind the clause, the Fair Trading Act currently provides similar protection in respect of advice, proposals and reports. The clause seeks to carry forward that protection and to update the provision to ensure that all of the functions of the authorities are appropriately covered. We are keen to allow people to be able to do their job, cognisant of the sensitivity of much of the material that is being dealt with and the commercial consequences of information entering the public domain. In that sense it is important for people to be aware of the constraints under which the authorities act, but the people who make decisions and work with the relevant authorities should be able to get on with their jobs without constantly looking over their shoulders.
 On the specific point about the nature of the privilege, obviously the Competition Commission will enjoy absolute privilege in relation to the reports that it lays before Parliament. The hon. Gentleman raises an important point as to what other constraints operate upon the relevant authorities. Clearly the authorities will operate only within their functions, which have been designed to ensure transparency. We believe that the Bill achieves the necessary balance between greater transparency and the need to ensure that the appropriate safeguards are in place. That greater transparency is certainly welcomed by the business community, as is the clear certainty that the Bill will bring to the process. The authorities, therefore, are under duties in relation to their disclosure of information. That will limit their actions. We want to ensure that the information is released in the public domain by the appropriate methods and that the correct balance between the confidentiality and sensitivity of the material and transparency is achieved.

Mark Field: Is there not a danger that, by having the fully fledged and absolute privilege in place, there will be no incentive on the public bodies to weed out some of the confidential information that they have received from third parties? When writing reports they might damage a business that may have been subject to a whispering campaign by consumer bodies or other companies that wrote confidential or non-confidential papers that were perhaps cavalier with the truth. Indeed, there would be no reason for the OFT to avoid writing a report that included all such comments that may have been submitted in a cavalier fashion. That lack of incentive to weed out the wheat from the chaff could be extremely damaging to companies.

Douglas Alexander: I will endeavour to answer, but I fear that I will go over some ground again. The clause builds on provisions that exist in the Fair Trading Act. Both sides of the Committee would agree that we need to strike the right balance between the greater transparency that we all seek to achieve through the Bill and the appropriate and necessary degree of confidentiality, given the sensitivity of the material. We believe that privilege is necessary, consistent with what has existed for almost 30 years under the Fair Trading Act 1973—to allow the authorities to do their job, but that job is necessarily constrained by the obligations on them in respect of the work that they undertake.
 Given the importance of the issue, I am sensitive to hon. Members' concerns, but I reiterate that we are drawing on the considerable experience of competition authorities in the United Kingdom. They have often proved to be capable of dealing with the sensitive material that necessarily comes into their hands. Again, we are talking not about fundamental shifts, but about updating the existing provision.

Nigel Waterson: The Minister makes a fair point about importing a provision from the 1973 Act, given that we have had almost 30 years to consider its implications. Is he aware of any situations that have arisen in that time in which the point that has been raised would have been an issue had there been qualified as opposed to absolute privilege?

Douglas Alexander: I am grateful for the hon. Gentleman's observation, because it allows me to clarify something. The clause does a number of things, but one key point, which perhaps I should have drawn out earlier, is that the existing Competition Commission reports benefit from absolute privilege, because they are laid before Parliament. That will cease under the new arrangements and so needs to be dealt with. That is part of the thinking behind the clause.
 I am not aware of any situations such as the hon. Gentleman has described, although I have not yet had the opportunity to speak to ministerial colleagues who have been receiving correspondence on the matter. I am sure that, if the CBI or a range of British businesses were deeply uncomfortable about 
 the operation of the Competition Commission or, indeed, the OFT, they would not hesitate to bring that to our attention. 
 Question put and agreed to. 
 Clause 104 ordered to stand part of the Bill. 
 Clause 105 ordered to stand part of the Bill.

Clause 106 - Enforcement of powers under section 105: general

Question proposed, That the clause stand part of the Bill.

Jonathan Djanogly: Once again, we are discussing the production of documents, and the enforcement powers latch on to that. The Bill will clearly make the commission much more forceful and powerful. As with many aspects of the Bill, we are dealing with an increase in enforcement powers and greater penalties.
 It is important to appreciate that, in most situations, most companies, particularly third-party companies, that are asked to provide background information will do so voluntarily and will help the OFT or the commission with their investigations as much as they can. The fear, which I and others have expressed at various times during the Bill's progress, is that with all the new enforcement powers the process will become more formalistic. Will the powers mean that, rather than providing a better flow of information, the flow of information will dry up? Will the information that is provided be only the minimum that is requested, so that the commission's questions are not fully answered? I should be grateful if the Minister would address that concern and give some comfort to business that, when they provide information, clauses such as this will be not be used against them. 
 The other issue that I want to raise goes back to the question of confidential information. That has arisen at innumerable points throughout the Bill and applies also to these provisions. If companies knew that they could consent in some way to the information that was released, whether under clause 106 or other provisions, would they not be more likely to be freer with the information that they gave in the first place?

Douglas Alexander: I shall put the hon. Gentleman's remarks in context by explaining the clause and then deal with his points about the monetary penalties and the consequences with regard to the way in which investigations are conducted.
 The clause gives the Competition Commission a power to impose monetary penalties on any person where specified information is not provided by a date formally notified by the commission in a clause 105 notice. The term "any person" means one of the merging parties or a third party. The power replaces the Competition Commission's current power to 
 apply to a court for a contempt finding. I hesitate to say it, given some of the company in the Committee, but it is closely modelled on the powers that are available to the European Commission under articles 11, 14 and 15 of the European Community merger regulation, which has operated successfully since 1990. 
 In respect of the point raised by the hon. Member for Huntingdon, we both want these discussions to take place as amicably as possible. I agree that the parties involved in an agreed takeover will usually co-operate, as the form and track records show. However, I do not concur with the view that suggests that monetary penalties are a disincentive to a more voluntary and co-operative approach being taken. There are circumstances in which inquiries will not always be known as adversarial; in hostile takeovers, for example, one party may be deeply unwilling to co-operate and third parties will often have no incentive to co-operate, yet their information is vital to the work of the relevant authorities in ascertaining matters such as market shares. 
 Therefore, we believe that the approach of the parties to information requests is often affected, not just by the fact that there are potential monetary penalties but also in terms of the way in which the system works in practice and—I say it in a spirit of self-reproach as a lawyer—by the conduct of the legal advisers themselves. We must ensure that the legal advisers involved do not take an overly adversarial approach, allowing no ability for the relevant authorities to expedite the process in a situation that is susceptible to tactical game playing by respective advisers. 
 Parties and their advisers are used to operating in line with the provisions and disciplines of the EC merger regime. We do not think that they will have any problem in practice with the importation of this regime into UK law.

Jonathan Djanogly: Does not the Minister appreciate that often the reason why the information is not provided is not because of the penalties but because the companies are afraid that that information will be put to uses other than those that the internal purposes of the investigation require? In other words, they ask if it will be released into the public domain. Can the Minister give any comfort to business that the provisions will not be used to allow confidential information, especially that belonging to third-party companies, to be released and used in a way that is detrimental to their interests?

Douglas Alexander: I am sensitive to the hon. Gentleman's point, but he is trying to identify a solution to what he perceives to be a problem in a clause that deals with something else. We are dealing with a substantive issue: do monetary penalties assist in the ongoing work of the competition authorities? I understand that discussions have already taken place in the Committee about the entrance into the public domain of information handed to the authorities. The substantive point at issue in the clause is whether
 those monetary penalties will focus the minds of the parties involved in the discussions. My view is that monetary penalties do focus minds and therefore make an important contribution to the non-adversarial approach that we are keen to ensure in as many cases as possible in this important work. 
 I hope that I have responded satisfactorily to the hon. Gentleman's point. I am sensitive to the fact that he has continuing and enduring concerns on issues of public disclosure of private information but I am not convinced that it sits comfortably within the debate. 
 Question put and agreed to. 
 Clause 106 ordered to stand part of the Bill.

Clause 107 - Penalties

Nigel Waterson: I beg to move amendment No. 290, in page 77, line 35, leave out `and' and insert `or'.
 I do not want to have a stand part debate on the clause, but I shall speak generally about this straightforward amendment, which would make the penalties, especially those set out in subsection (7), alternatives rather than accumulative. It is based on a concern raised by the CBI that the penalties are pretty harsh. We accept that the powers of enforcement in investigation are necessary and that they should be backed up in appropriate circumstances, which we hope will be few and far between, with penalties. The CBI took the view that the penalties in clause 107 are heavy and draconian. The amendment would deal with that by making the penalties into alternatives. In theory, a fixed penalty amount not exceeding £30,000 could be imposed along with a daily rate of £15,000 or more. Taken together, that would be a substantial amount of money. The Minister accepts that we are talking about relatively few instances, but on what basis have Ministers concluded that the level of the penalties and their cumulative nature is appropriate? I assume that when they consulted on those matters organisations such as the CBI sounded something of warning bell.

Douglas Alexander: I will take some time to go through the detail of the points that the hon. Gentleman has raised. On the basis of the CBI briefing and his remark, I assume that the amendment is designed to prevent the Competition Commission from setting both a fixed-rate penalty and a daily-rate penalty for the same failure to provide information.
 The Competition Commission must have effective information-gathering powers, which is a view held by all members of the Committee. In the new regime, it will be taking final and irreversible decisions against a tight statutory deadline of 24 weeks. It will be expected to take fully informed and high-quality decisions on which the shape of important sectors of the economy may depend. It is therefore right that it will have the power to impose both a fixed-rate penalty and a cumulative daily penalty for further 
 days of delay and that it can impose a combination of the two. 
 A fixed-rate penalty clearly has value as a deterrent, which is similar to the points that we were making on the previous clause. It will provide a strong incentive for parties to comply with a request for information. However, once it has been imposed, it has no further value as a lever for securing the required information. In those circumstances, the cumulating daily-rate penalty becomes the more potent power. It will increase the likelihood of parties complying with the information request, which must be the main purpose of the powers. After all, the point is to secure the relevant information, rather than punishing parties, which was the point made earlier by the hon. Member for South Cambridgeshire (Mr. Lansley). The point is not to punish, but to secure the relevant information for the relevant authorities. I suspect, too, that the fact that a daily-rate option is available will perhaps encourage the Competition Commission to impose lower fixed-rate fines. 
 The hon. Member for Eastbourne is concerned that being able to impose both types of penalty may lead to excessive penalties being imposed, but the effect may well be the opposite of what he fears. The ability to use the two powers may actually lower the overall amount of any penalty.

Jonathan Djanogly: If the fixed-rate penalty were imposed rather than fixed and daily-rate penalties, but the information was still not provided, could the Competition Commission go back to the court and ask for a daily rate to be imposed as well? Can a further penalty be added to what is, in effect, a conviction?

Douglas Alexander: No, as I hope I made clear in my earlier remarks, the specific provision to allow for both a fixed penalty and a daily rate to be imposed is designed to address a situation in which a fixed penalty has been imposed but no action has been taken on the disclosure of information by the companies affected. In those circumstances, it is appropriate to give authorities the power further to incentivise the passage of information, which is so important to their work. In that sense, the clause recognises a possibility by which both penalties would be imposed, but we are aiming for an outcome that would result in the overall sum of money handed over being potentially less.
 I should like to reassure the Committee that the use by the Competition Commission of the powers will not be arbitrary. Clauses 105 to 112 set down a detailed procedural framework that we believe to be both fair and reasonable. Before a penalty can be imposed, for example, the Competition Commission must consider whether a person has a reasonable excuse for a failure to comply. There is a full right of appeal to the Competition Appeals Tribunal for aggrieved parties. Furthermore, the Competition Commission is required under clause 112 to consult on, publish and then have regard to a statement of 
 policy on the enforcement of information notices and the considerations that will be relevant in determining the type and amount of any penalty that is imposed, which is an important safeguard. That will provide the necessary certainty for business about how those penalties will be used in practice. 
 As I emphasised earlier, the powers are closely modelled on equivalent powers in articles 11, 14 and 15 of the European Community merger regulations. It is right that we pick the best aspects of the equivalent merger regimes elsewhere. Those powers have worked very effectively for the European Commission for more than a decade—since 1990—and they should therefore be incorporated into the domestic regime. Therefore, I ask the hon. Member for Eastbourne to withdraw the amendment.

Nigel Waterson: I repeat that we do not have a problem with the powers; it is the penalties that back them up. I am sure that business appreciates the certainty involved, but the certainty that one is going to be hammered is not necessarily the sort of certainty that it wants. The penalties are quite stringent. I have expressed our views and those of the CBI. I do not want to disturb the pre-lunch torpor of the Committee, so I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 107 ordered to stand part of the Bill. 
 Clauses 108 and 109 ordered to stand part of the Bill.

Clause 110 - Appeals in relation to penalties

Question proposed,That the clause stand part of the Bill.

Andrew Lansley: Having roused myself, Mr. Beard, I just want to ask a question. I want to talk a little more about the Competition Appeals Tribunal, in relation to clause 114 and others. A specific decision has been made to use the CAT as an appropriate body. The structure of the tribunal, as the Minister will know, centres on expertise in competition law, rather than the general issues, although the president of the tribunal must be a senior lawyer. Is the CAT the best body to deal with the decision? Or would it be simpler for the decision on the appropriateness of a penalty of this kind, which is to be akin to a penalty for an offence, to be considered through the High Court in the normal way? The issue does not bite
 directly on competition law consideration so much as the behaviour of individuals in receipt of a notice from a public body. It is of a generic kind in that direction, rather than of a specific kind in the competition direction.

Douglas Alexander: I suppose that that partly turns on one's understanding of the economic expertise of the CAT. It could be argued that a certain awareness of the importance of finance and economics would equip it well to make deliberations on the penalties of which the hon. Gentleman spoke. The substantive and serious point that must be addressed is how we achieve the maximum degree of expedition and certainty in the process. It is a mistake to move on to the grounds of philosophy—but that is the underlying thinking behind the Bill.
 In essence, we believe that the CAT offers a cheaper and quicker remedy for the parties involved, and a more appropriate forum in terms of which fines can be determined, than involving a decision of the High Court or whatever would be decided by the alternative judicial forums in which those matters could be described. The whole thrust of the Bill is to try to provide a degree of certainty in terms of the route by which a case would be taken forward. I emphasise and echo the argument of the hon. Gentleman that someone of considerable distinction in terms of legal qualifications will be sitting in the chair of the CAT, which I think would deal with some of the concerns that he has raised about its ability to deal with such matters appropriately. 
 Question put and agreed to. 
 Clause 110 ordered to stand part of the Bill. 
 Clauses 111 to 113 ordered to stand part of the Bill.

Clause 114 - Review of decisions under Part 3

Alistair Carmichael: I beg to move amendment No. 172, in page 81, line 5, leave out "person" and insert "party to a merger".
 I had intended to say that the arguments for the amendment could be put in a short compass. That notwithstanding, I do not think that they could be put in sufficiently short a compass to be concluded this morning. 
 It being One o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
Adjourned till this day at half-past Four o'clock.